How “buy now, pay later” marketing is changing the financial industry

Blue, the color of confidence, has long been the hue of choice in financial marketing. That was until Klarna showed up with their millennial rose and Snoop Dogg in tow, looking to dismantle the sector. As part of The Drum’s latest Deep Dive, Marketing Secrets of Fast-Growth Brands, we take a look at the (sometimes controversial) tactics used in finance.

The “buy now, pay later” (BNPL) industry has grown exponentially in recent years, accelerated by the strain the pandemic has put on consumers’ wallets and the continued migration to online shopping. Klarna is the best known, but since its inception, brands such as AfterPay and its subsidiary ClearPay have also joined the market, followed by Layby and Affirm, as well as former fintech PayPal updating its product to offer BNPL.

Market leader Klarna is ruled by the idea that the old banking system is broken and there to challenge the status quo. “The old blue that used to mean ‘trust’ but the industry hasn’t kept up with the times and now it’s synonymous with lack of mobility,” says AJ Coyne, its global brand and creative manager. “We believe in being a pink flavor in a sea of ​​boring blue.”

At creative agency Cult, which works with ClearPay, partner client Owen Rowbotham says BNPL’s marketing success is a result of the constraints it operates within, and that a lack of trust around BNPL has “forced brands to be much louder about what they do”.

Rowbotham colleague Emma Greenway, who is responsible for Cult’s European accounts, adds that regulation is driving BNPL’s marketing strategies. “Brands are pretty stifled by all the big social channels – they can’t use influencers, for example, which drives them to be disruptive and different. The huge handcuffing that occurs means they have to be very creative.

According to Rowbotham, this means BNPL brands use “old-fashioned marketing tactics,” instead excelling in experiential activations and events that circumvent many regulations.

Outdoor advertising has been a big channel and Klarna won three Drum Awards for Out Of Home 2021.

Build relationships with consumers

Kelly Gillease, chief marketing officer of personal finance company NerdWallet, says building a brand is key for newcomers to financial services. “Understanding and comparing the differences between specific financial products can be difficult given the complexity of many of these products, but connecting with brands is easier,” she says.

According to Gillease, fintech is the newest industry to really focus on branding and its success is marked by its ability to “provide consumers with information about products and services they didn’t know they needed”.

At NerdWallet, Gillease says it’s important to “show up in places and spaces where consumers might have money questions.” She gives the example of sponsoring a home improvement show that might spark thoughts about refinancing. She adds that for fintech brands, “partnerships are also a major source of consumer acquisition” and suggests linking up with retailers to be visible at checkout.

What future for the BNPL?

Coyne’s latest strategic priority is to tell consumers that Klarna has overtaken BNPL. “The main challenge we face in marketing is to help the world realize that we are not just BNPL and that in fact the Klarna story goes far beyond payments,” he says. . “Klarna is here to disrupt and revolutionize the way people shop, bank and pay.”

To achieve this goal, Klarna has acquired search tool company Price Runner – which helps customers find the cheapest retailer – as well as automatic discount company Piggy.

According to Coyne, competition from a “swarm of copycat products and offerings” trying to replicate its brand has kept Klarna on its toes. “It forced us to constantly test ourselves and look for ways to challenge ourselves and drive change in the category.”

Traditional banks are taking note

For Dionysis Livanis, creative director of the branding agency owned by Definition Red House, the rise of BNPL is forcing traditional banks to update their brands and systems to compete with challengers. HSBC has been on top of this trend, showcasing its bright red color scheme in eye-catching OOH campaigns.

“Traditional banks like HSBC, Barclays and Lloyds will need to update their brands and systems to be able to not only compete with challengers, but also adapt to a changing banking landscape and the new habits and expectations of their customers,” did he declare.

Livanis compares the landscape to when British Airways launched low-cost airline Go on the back of EasyJet, challenging the aviation model. If banks don’t adapt to the new reality, he says, they risk losing more customers and being seen as irrelevant. “The brands that do this as soon as possible will be the ones that benefit the most.”

For more marketing secrets on fast-growing brands, check out The Drum’s latest Deep Dive.

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